Failure 'built into decisions', warns NAO chief

When projects fail it is often because of bad early decisions, the head of the National Audit Office has said.

Failing to set clear objectives and consider how public spending decision will effect complimentary services and being overly optimistic about outcomes are some of the ways governments make poor spending choices, said Lord Amyas Morse, comptroller and auditor general at the public pending watchdog.

Speaking at the Public Sector Show in London today he said: “Often failure is built into the way decisions are made.”

Morse said political and policy influences were a legitimate and democratically necessary influence on spending decisions, but without care they could result in spending that is not in the public interest. “It’s complicated. It’s not easy to make good decisions with government because of the interaction of normal management considerations with politics.”

Politically-motivated reforms risk being stifled by poorly defined objectives, as in the case of the Lansley health reforms, said Morse. “We were finding it difficult to find anyone who could coherently tell us what the reforms were supposed to be for.” The controversial reforms made by Andrew Lansley while he was health secretary from 2010 to 2012 sought to take spending decision away from primary care trusts and give them to consortiums of GPs.

Similar to the Lansley reforms, the decision to continue funding Kids Company, despite its financial instability, was a case of senior officials imposing judgement over processes, said Morse. An NAO report published after Kids Company collapsed found it had received at least £42m in central government grants, and that the government had relied heavily on the company’s own assessments.

Understanding the knock-on effect of spending decisions can also make or break their success. When the government decided to start cutting local government spend, a “reasonable” policy, Morse questioned whether it had considered all the consequences. “Did it understand that local government has a huge range of statutory responsibilities including children’s services and social care,” he asked. “Did it understand that there was a strong linkage between social care and the [healthcare system]?”

Morse said there was very little evidence that this was understood at the time, though this had now changed.

Understanding the mechanics of how spending works is key, said Morse, and being realistic about projected outcomes. “I criticise optimism in nearly every [NAO] report I do,” he said.